Fri, 07 Aug 2020

Europe's Businesses Work Overtime, but Are They Booming

Voice of America
27 May 2020, 04:35 GMT+10

AMSTERDAM - With shops, hairdressers and other places opening again across Europe, business owners are working overtime to ensure they will make up the lost income after two months of closure. But few believe this spike in pent-up business signals a post-crisis boom.

Wils Wolvers - whose salon outside of The Hague has been operating for the past 14 years - got 1,500 bookings in the days after it was announced he could reopen. After being closed for two months, he and his team are working around the clock to keep up.

"We had to put in screens in between the washroom units so we could still wash people or else they will be sitting next to each other. And between our stations where we cut and color, we also have screens. Normally we could have five or six people at a time. But we can do half of it. So that's why we're open for seven days, including nights," he explained.

Wolvers is happy to be fully booked for the foreseeable future but doubts the bookings will make up for the loss of income when the salon was closed.

Government relief money helped his business pay for employees' salaries during lockdown, but he still had to spend his part of his savings on fixed costs, such as insurance and mortgage.

Across Europe, shops and restaurants have either opened or are preparing to open again. Restaurants are getting many reservations and people are lining up to enter non-essential shops. But the social distancing measures mean the businesses can only operate below normal capacity.

Research fellow at the European Economic Think Thank, Bruegel Simone Tagliapietra, says that despite lockdown measures easing, consumers also are spending less.

"New data just released by the European Central Bank has shown that savings in Europe in the month of March are far beyond the average level of savings in the past years. People are simply saving, putting money aside. They don't know if a second wave of the contagion will come. They are unsure about the safety of their job, so they don't spend," said Tagliapietra.

Small and medium-sized businesses make up 99 percent of all enterprises in the EU. There are 25 million of them, and they employ more than two-thirds of the EU's workforce. They are the backbone of the EU's economy, but also are the most vulnerable to external shocks like a pandemic.

A survey done by SMEunited, an umbrella organization for Europe's small and medium sized enterprises, shows that half of those businesses had a 50-percent loss of income. This number climbed up to 80 percent in countries harder affected by the coronavirus pandemic, like Italy and Spain.

Secretary General of SMEunited, Veronica Willems, says that businesses have been very creative during the coronavirus lockdown to stay afloat, but still need support.

"What we've noticed for the national support packages put in place, as well as for the European measures that were put in place, was that they didn't reach the entrepreneurs as fast as the entrepreneurs had hoped. We feel it's very important is a continuation of the emergency measures where needed," she said.

The European Union is debating plans for a massive economic recovery fund that includes grants, loans, and guarantees that could total more than $2 trillion. France and Germany presented their own plans last week.

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